2020 was a wild year, to say the least. The Coronavirus caught the world off guard and made the world come to an abrupt halt. If you’ve been following the CBRE multifamily report for 2020, there’s a good chance that you’re already aware that the mid-Atlantic market is still strong. If you haven’t had a chance to look over the report, don’t worry. We read over it for you and we’re happy to give you a summary to save you a little bit of time, as well as catch you up to speed on some of the latest information from CBRE.
The Mid-Atlantic Market is Resilient in Recessions
If there’s one thing that the market crashes have shown us, it’s just how resilient the mid-Atlantic multifamily market really is. Baltimore, Maryland, and Washington D.C. rated number 1 and 2 for cities with the least impacted rental growth, only taking about half the time to recover as the average part of the country. Since the recovery in 2010, both cities have had rent grow 4% and 6% respectively, and investors remain bullish in this market. Washington D.C. also has a very strong labor force, which only leads to this market being more resilient with lots of working-class people.
There is a Strong Work Presence in the Mid-Atlantic Market
The number of jobs in the area only continues to grow as time goes on. More and more talented tech workers continue moving into this region, meaning that there could be some potential for some significant growth in this market. At this point in time, CBRE would only rate San Francisco over Washington D.C. for the area with the largest amount of tech talent, and this influx only seems to continue as time goes on. This could result in a demand for class-a and class-b multi-family homes in the near future.
That’s not all that’s going on with the available jobs in the region. Amazon just opened up a second headquarters right in the middle of the area, meaning that over the next 14 years over 37,000 new jobs. The expected average salary of each employee is around $150,000, and Amazon has already hired 1,000 workers for this location.
On top of the jobs that Amazon is bringing indirectly, there is an effect that Amazon seems to bring with it everywhere it goes. Because a big new Amazon office is opening up, many other businesses will follow suit and open nearby.
- It’s estimated that this could create 185,000 jobs by proxy, which would also ramp up the need for multi-family homes in the area.
There’s also the Virginia Tech Innovation Campus, which is expected to give 25,000 to 30,000 students degrees in STEM, further increasing the demand for multi-family homes. The Virginia Tech Innovation Campus is estimated to be worth about one billion dollars, and with college students potentially coming in from town, the housing market is expected to grow even more.
Potential Challenges in the Mid-Atlantic Market
While there is room for a lot of growth in the mid-Atlantic market, there are still some challenges ahead. One of the biggest issues currently facing potential investors is the increase of supply happening in the area. There are already thousands of units being built and more planned over the next few years, meaning that the supply may catch up to the demand before too long.
- Construction continued on steadily throughout 2020 without any signs of slowing down, and there were an estimated 15,000 united built that year on its own.
- There has also been a vacancy increase.
Based on the information that we have, this should be a temporary issue, but there is some potential for people leaving the region more quickly than others move to it. The reason for this is both unemployment and a rise in people working from home. Both of these groups have been deciding that it may be for the best to move somewhere else in hopes of some cheaper rent. In some cases, this involves people living out of their vans or RVs to skip out on paying rent altogether because they’d rather spend their money elsewhere.
Big Changes Through the Pandemic
One of the biggest changes that happened because of the pandemic was the normalization of virtual tours. If you don’t know what those are, it’s just a tour done on the computer. There’s a collection of pictures of the apartment, and you simply click through to see the whole layout. Because of the pandemic, it was a lot harder to see people face to face. Surprisingly or not, this has largely gone off without a hitch.
- Washington D.C. saw a lease sign rate drop by 2 per month, but Baltimore saw an increase of 3 per month. Across the board, it’s mostly evened out.
There have been some other minor changes in the market, the other most notable being the eviction moratorium. At the time of writing, all federal eviction moratoriums are lifted nationwide, but that was a significant struggle for landlords all over the mid-Atlantic.
There may have been some changes to this since the time of writing, but the CBRE reported that D.C.’s moratorium was lifted in October of 2020, in North Virginia it was lifted in September of 2020, and at the time the report was released Maryland had already lifted its moratorium.
Strong Markets in the Mid-Atlantic
The CBRE report for 2020 was pretty clear, prospects are looking very promising in the mid-Atlantic multi-family property market.
With a lot of opportunities coming to the area that have the potential to bring jobs and people as well as a strong labor force, the mid-Atlantic region, as usual, is one of the strongest markets in the country. Only time can really tell where the multi-family housing market will go in this region, but if things play out the way they look like they will, things should continue going smoothly for investors in the area.